Economic Impacts of CAFTA- DR on US & Texas Agriculture Parr Rosson Professor & Director Center for North American Studies Department of Agricultural Economics
Overview of CAFTA-DR CAFTA-DR Implemented on a Rolling Schedule El Salvador-March 1, 2006 Honduras & Nicaragua-April 1, 2006 Guatemala-July 1, 2006 Dominican Republic-March 1, 2007 Costa Rica-Approved October 7, 2007 CAFTA-DR is Six Bilateral Pacts CAFTA-DR Upholds CACM & WTO Obligations
CAFTA-DR Tariffs and Phase Outs Product Range of 2004 Applied Tariffs Maximum WTO Bound Tariffs TRQ/Years Beef15%-30%79% Other Yes/15 HQ No/Immediate Cotton1%60%N/Immediate Rice15%-60%90%Y/20 Years Soybeans1%-5%91%N/Immediate
CAFTA-DR Tariffs and Phase Outs Product Range of 2004 Applied Tariffs Maximum WTO Bound Tariffs TRQ/Years Wheat6-14%112%N/Immediate Corn45%75%Y/10-15 Sorghum 15-20%90% Mixed/Immediate Dairy65%100%Y/20/Varies Poultry 164%250%Y/20/Varies
CAFTA-DR Prospects U.S. Agriculture Export Gains of $1.5 Billion Annually (AFBF) Near Term: HQ Beef, Cotton, Wheat & Soybeans Long Term: Rice, Dairy, Pork, Poultry & Corn Many Tariff Reductions ‘Backloaded’ Challenges: Sugar, Cantaloupe, Honeydew Limitations: Infrastructure, Income Growth/Distribution, Plant & Animal Health
World Average Agricultural Tariffs, 2002 Source: WTO & ERS/USDA Asia Caribbean Islands Central America South America European Union North America United States Percent Region Average World Average 62%
Country Pop. (mil) GDP/ Person Poverty % Lit. % Ag. Pop. % Costa Rica 3.9$8, El Salvador6.5$4, Guatemala13.9$3, Honduras6.7$2, Nicaragua5.1$2, Dom. Rep.8.7$6, CAFTA-DR Demographic Overview
CAFTA-DR Impacts on US Billion Dollars Number of Jobs Economic Baseline-
CAFTA-DR Impacts on Texas Economic Baseline- Billion Dollars Number of Jobs
CAFTA-DR Impacts on Texas Million DollarsNumber of Jobs Economic Baseline-
Conclusions As a Group, CAFTA-DR Has Solid Potential Guatemala is likely engine for early market growth Early US Gains for Beef, Wheat, Soybeans Longer term gains for corn, rice, dairy Backloaded Tariffs Hinder US Export Growth (rice, dairy, corn) Poultry, Corn & Rice Certain Sore Points with CA Countries Sugar, Some Fresh Produce Likely Sore Points for US Producers
Thank You! Questions? Parr Rosson Department of Agricultural Economics Texas A&M University College Station, TX Telephone: